Regional pharmaceutical deficit offers export opportunities

07 Mar, 2021 - 00:03 0 Views
Regional pharmaceutical deficit offers export opportunities

The Sunday Mail

Trade Focus

Allan Majuru

AS local companies get ready to increase production following the relaxation of lockdown measures announced by President Mnangagwa, there is a need to focus on niche products that have a competitive edge in regional markets. 

The pharmaceutical sector is already one area that has been identified as having potential to contribute significantly to the nation’s economic growth. 

Although the sector has had a few challenges affecting its performance over the past few years, the pharmaceutical industry is set for accelerated growth under the National Development Strategy (NDS1) and the Zimbabwe Pharmaceutical Development Strategy (2017-2022). 

The industry development strategy is designed to promote growth in the sector through increased production and exports of medicines into the region and the rest of the world.

Under the NDS1 period, the Government has committed to increase the number of locally produced essential medicines, increase proportion of companies complying with international World Health Organisation as well as reduce the medicines import bill. 

Increased production, coupled with more players in the pharmaceutical sector complying with international standards is going to improve the sector’s competitiveness, which in turn will make it easy for locally manufactured products to perform in regional markets. 

Further to this, the growth in the pharmaceutical industry will be export-driven, leveraging on regional pharmaceutical deficits, regulatory harmonisation, market proximity and the SADC Free Trade Area. 

Undoubtedly, there are vast opportunities available in the pharmaceutical sector in regional markets that could unlock long-term revenue streams for local companies, riding on proximity and the regional development agenda. 

Apart from exporting finished products, the pharmaceuticals sector offers a number of opportunities for local companies to participate in regional value-chains. 

Regional scan and opportunities 

The Southern African Development Community (SADC) Secretariat completed the profiling of the pharmaceutical industry last year where immediate opportunities were identified around malaria, anti-retroviral viral drugs, and condoms. 

For example, although the region has an ambitious target to eliminate malaria, the production of bed nets (mosquito nets) remains low, at only less than half the regional demand.

The limited production of mosquito nets in the region resulted in all 16 SADC Member States importing bed nets, warp knit and other antimalarial supplies worth an estimated US$34, 8 million from across the world in 2019, according to Trade Map.

This figure does not include aid-related products that are donated across the region from international donor organisations. 

Mozambique was the largest importer of bed nets, warp knit, and antimalarial equipment in the region in 2019, taking goods worth US$23, 3 million, representing 67 percent of the total import from the region. 

If Zimbabwean companies are able to invest in the manufacturing of these antimalarial kits there are high chances that they will take over the regional market, riding on proximity and regional trade agreements. 

Further to this, there is a limited intra-regional movement of malaria drugs as no manufacturer is pre-qualified by the World Health Organisation and their market remains limited to domestic in-country sales. 

There is also no registered manufacturer of primaquine in the region, regardless of this being the more potent drug in the fight against malaria. 

The production of rapid diagnostics tests in the region is still at infancy stage, which means companies that can develop reliable products in good time will likely take the largest share of the regional market.

The SADC region has a target to end HIV/AIDS by 2030, a commitment that opens up opportunities for condoms as they are the only available device that offers triple protection against sexually transmitted HIV, other Sexually Transmitted Infections (STIs), and unintended pregnancies.

Although there is a high demand of condoms in the region, the production is only undertaken in Namibia and South Africa only, and these only serve their domestic markets. 

The gap created by insufficient production saw SADC Member States importing condoms worth US$42, 2 million in 2019, a figure that does not include products which came as international aid. 

The largest suppliers of condoms in the region are Thailand, Malaysia and China. 

Meeting the 2030 HIV/AIDS target also requires the region to provide sufficient ARV drugs to its citizens. 

According to the SADC Secretariat, available 2013 estimates show that 14, 7 million people were living with HIV in the SADC region and about 11, 7 million of them needed Anti-Retroviral Therapy (ART). 

However, only six million were on ART and the target was to increase the number of people on treatment by end of 2020. 

Looking at the sources of drugs that are expected to cover the rest of the region, the SADC region has only five companies that only have capacity to cover 15 percent of the SADC generic ARV market. 

This present production capacity has forced most countries in the region to secure their ARVs from elsewhere across the world, revenue which could be channelled into the country if more companies produce the required drugs. 

What is required is investment to be driven into the pharmaceutical industry so that Zimbabwean companies improve on their production capacities, which will make it easy to meet the demand in the region. 

Tapping into Africa’s market

Apart from the regional markets, local companies can leverage on the African Continental Free Trade Area (AfCFTA) to tap into the rest of the continent. 

According to United Nations Industrial Development Organisation (UNIDO), the pharmaceutical market in Africa was estimated to be worth US$40 billion to US$65 billion annually in 2020.

Across the continent, UNIDO reports that 90 percent of medicines are imported, and most African pharmaceutical manufacturers mainly import active pharmaceutical ingredients (APIs) and excipients from India and China.

“At the same time a large share of the medicines supply especially for HIV/AIDS, malaria and tuberculosis is provided by international agencies at a level that will not be sustainable in the long term.”

Some African countries are now graduating from international donor support and are building reliable sustainable supply systems. 

If Zimbabwean companies do not increase production now, they will miss out on opportunities in a decade, as African countries will soon have capacity to export HIV/AIDS, malaria, and tuberculosis drugs. 

Further to exporting pharmaceutical products to the rest of the continent, the AfCFTA has potential to facilitate the participation of local companies in regional and continental value chains.

To improve linkages between Zimbabwean producers and markets in Africa, ZimTrade – the national trade development and promotion organisation – is facilitating the participation of local pharmaceutical companies at the Intra-Africa Trade Fair, scheduled for Rwanda in September this year. 

The event is expected to unlock pharmaceutical opportunities and provide a unique window for Zimbabwean pharmaceutical companies to get direct access to the growing African market. 

Going forward 

Crucial to unlocking opportunities in the region is identifying where local companies can participate competitively.

The Action Plan for the SADC Industrialisation Strategy and Roadmap identifies some areas where Zimbabwe has potential for value chain enhancement, and these are ARVs and anti-TB drugs. 

Improving production and export of these products could open routes for exporting more pharmaceutical products into the region. 

The development of the pharmaceutical industry will require deliberate investments towards establishing manufacturing plants as well as coming up with programmes that will facilitate improved movement of knowledge to Zimbabwe. 

Developing special economic zones for pharmaceutical manufacturing as identified by the Zimbabwe Pharmaceutical Development Strategy (2017-2022) will also strengthen the competitiveness of the sector. 

Here, special incentives will be made available to local producers, which will enable them to retool and develop more export oriented pharmaceutical products. 

Allan Majuru is ZimTrade chief executive

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